PLNJhard
A New Jersey personal lines producer collects $2,400 in homeowners premium from a client on Monday but the carrier's net premium statement is not due for 20 days. Which practice complies with N.J.A.C. 11:17A fiduciary duties?
Deposit the $2,400 into a separately titled Premium Trust Fund Account and remit per the carrier's accounting cycle
BDeposit the $2,400 into the producer's general operating account and remit later, since the carrier's net statement is not yet due for 20 days
CHold the funds in the producer's personal savings account to earn interest until remittance
DApply the funds against the producer's office rent and reimburse the trust later
Why this is the answer
Under N.J.A.C. 11:17A, premium funds are fiduciary in nature. The DOBI exam standard is a separately titled Premium Trust Fund Account used exclusively for premium funds, with monthly reconciliation. Holding funds in an operating, personal savings, or expense-paying account constitutes commingling and supports license action under N.J.S.A. 17:22A-40 plus potential criminal theft exposure.
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